Case Study: Keurig/Green Mountain Coffee Company and the K-Cup Categories; Single Cup Coffee and Possibly Small Appliances from NPD

Path to Purchase

There is no question more central to the practice of marketing than what makes people buy things. We have plenty of metrics and models, but confusion still prevails. Most probably, a lot of the befuddlement is due to the fact that there is really no one true path to purchase. Different people at different times will interact with different brands and categories in a variety of ways. We might agonize over the choice of a candy bar and rush through the purchase of health insurance. There is no law that prevents us from doing whatever we want. However, just because consumer decision making behavior is often complex and capricious is no reason to just throw up our hands in despair. There are effective and systematic ways of thinking about how people interact with brands and and metrics to help guide us. The Path to Purchase

It has long been known that the purchase decision is much more than an event, it’s a process and therefore brands must develop over time. The evidence for this is overwhelming and there are a wealth of frameworks to describe it (the agency that I work for uses 7 stages in their model). The following is my own summary, which is probably no better or worse than any other. Awareness: Awareness may be the most overused term in marketing, so much so that it is often meaningless in common parlance. In actuality, it is a blanket term that covers a variety of metrics, including aided and unaided awareness, awareness of brand attributes, etc. Nevertheless, awareness is quite important and has been linked to brand usage. Although some skeptics point out that brand usage itself promotes awareness and the relationship is somewhat reflexive, awareness is something we can directly control and raising it increases sales. Another issue is that many brands have nearly total brand awareness, so there is little utility in increasing it. However, even for the biggest brands, awareness of brand attributes (i.e. quality, value, taste, safety, etc.) remains an important factor for sales and again, raising awareness of an attribute is something that is highly actionable. Consideration: For most categories, consumers develop mental consideration lists (usually 3-5 brands) from which they will make their final purchase decision. While the consideration phase is less important for low involvement categories like potato chips, it is essential for durables. Take a car purchase, for instance. Let’s assume that consumers buy a car every 3 years, surely they will not respond to an offer for the majority of that time. They will only do so when they are actively in the market (usually the last 6 months or so). During the rest of the time, they are building their list. When someone is just starting to shop around, they will be able to rattle of a handful of brands that they are going to research further. Buying a car is a big deal that requires a lot of research and involves a lot of money, so consumers will use their lists to filter out other brands. Consideration is often very informationally intensive. Trial: It should be obvious that neither awareness nor active consideration automatically result in sales. You still need to close the deal. A lot of things can help convert consideration into sales. Well trained and friendly salespeople, in-store displays, point-of-sale advertising, discounting, sampling and so on. Of course, digital technology is revolutionizing direct marketing, so now we can optimize conversions to purchase better than ever. Loyalty: Retaining customers is more profitable than going out and acquiring new ones, so inspiring loyalty is crucial for every brand. Of course, this is about much more than promotion. Marketers need to make sure that the product is delivering what the consumer wants. Of course, promotion can play an important...

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GreenMountainCoffeeRoasters, Inc. (GMCR)
Prepared For
Gary L. Payne, MBA
Sam Houston State University
Prepared By
Eric Robinson
Fall Semester 2013
Part I
History
The coffee and tea manufacturing industry has become a $70 billion annual global sales commodity (First Research, Industry Overview). Business continues to boom and coffee manufacturers are able to broaden...